Investment in India - Key Acts Governing Foreign Investment

Foreign Exchange Management Act, 1999 (FEMA)

FEMA provides for virtually full convertibility on capital and current account transactions for non-residents, while it subjects residents to non-convertibility on capital account transactions only. Under FEMA, an Indian company with foreign equity participation is treated on par with other locally incorporated companies. Accordingly, the exchange control laws and regulations for residents apply to foreign-invested companies as well.

Repatriation

Repatriation of capital: Foreign capital invested in India is generally allowed to be repatriated along with capital appreciation, if any, after the payment of taxes due on them, provided the investment was approved on a repatriation basis.

Repatriation of dividends and profits: Profits and dividends earned in India are repatriable after the payment of taxes due on them. No permission of RBI is necessary for effecting remittance, subject to compliance with certain specified conditions.

Acquisition of Immovable Property

Acquisition of immovable property by a Non-resident: A person resident outside India, who has been permitted by RBI to establish a branch, or office, or place of business in India (excluding a Liaison Office), has general permission of RBI to acquire immovable property in India, that is necessary for, or incidental to, the activity. However, in such cases, a declaration, in prescribed form (IPI), is required to be filed with the RBI, within 90 days of the acquisition of immovable property.

Foreign nationals of non-Indian origin who have acquired immovable property in India with the specific approval of the RBI cannot transfer such property without prior permission from the RBI.

Acquisition of immovable property by NRI: An Indian citizen residing outside India (NRI) can acquire by way of purchase any immovable property in India other than agricultural/plantation/farm house. He may transfer any immovable property other than agricultural or plantation property or farm house to a person resident outside India who is a citizen of India or to a person of Indian origin resident outside India or a person resident in India.